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When the ¨Dodd-Frank Wall Street Reform and Consumer Protection Act¨ was passed July 21st, 2010 there was a part of the bill that pertained to, ¨Conflict Minerals¨. The goal of the conflict mineral portion of the Dodd-Frank bill was to make companies disclose the origin of the minerals used in their devices. This was a good idea, but is much more difficult than I imagine the policy makers thought it was. How do you track metals that are routinely smuggled out of the DRC into the neighboring countries and then exported legally? So far we have no way of verifying the origin of tantalum.
According to the USGS about 50% of all tantalum is mined in Africa including the DRC, Ethiopia, Mozambique and Rwanda. Each country has its own set of geo-political circumstances that make the mining and exportation of tantalum unique. Recently Ethiopia decided to halt mining of tantalum until they build an operational processing plant that will cost $20 million. The tantalum from Ethiopia was found to have high levels of uranium contamination. Annually Ethiopia was producing 350t of tantalum according to the local newspaper. That is a lot of tantalum to take off the world market. Currently the amount of worldwide production is approximately 1100t. Ethiopia states that it has a 15 year supply of tantalum deposits. The Meles regime sees a powerful revenue stream and will not relinquish control. Unlike the DRC, Ethiopia is considered a stable nation.
In places like the DRC where regional warlords control the mining and exportation of tantalum and other conflict minerals the tracking of the metals is much more difficult. The Dodd-Frank Bill was passed with good intentions but following through has shown to be difficult. If a nation like China struggles to reign in the illegal miners within its own borders, how much more difficult will it be for a nation like the DRC which has a weak government.
What is the big deal? Why is this so important? Tantalum has been deemed a, ¨Critical Metal¨, by the USGS. This amazing element can be found in most of your everyday electronics in the form of capacitors. That iPhone, iPad, smartphone and laptop all contain tantalum. The mineral also is used in national defense applications like guidance systems and jet aircraft engines.
All companies share the responsibility in making sure that the world supplies of natural resources are deemed ethical. I have heard people say that we should not import tantalum and other conflict minerals from the DRC. This also has its consequences. Families rely on this mineral for their livelihood. If mining was to end tomorrow in the DRC thousands of families would no longer have an income. There is no blanket fix, for the conflict mineral issue. In the coming years it would be nice to see companies and countries follow the minerals from source to production. Every company should perform checks along the whole process. I can hope that in the future we might be able to stop using the term, conflict minerals.
Give consumers alternatives they can feel good about buying – devices sourced and assembled in a fair, safe and green manner. Then let the market decide whether it values worker rights over cheap devices. The manufacturer that takes the gamble could own a niche in a market rife with conscientious young customers.
Well, it sounds like a simple solution, anyway.
The more I researched the issue and talked to supply chain and fair-trade experts, the more complicated things became.
For starters, no such designation exists for electronics today and it would require buy-in from the industry to establish one, said Heather Franzese, director of new business at Fair Trade USA in Oakland.
Businesses have to want to stamp their products with such declarations to differentiate them in the marketplace. Unlike segments of the food and apparel sectors, however, tech firms have displayed little interest in doing so. Typically it takes a critical mass of consumer and media pressure before industries move in this direction – and it seems we’re not yet there.
But perhaps the thorniest problem comes in determining what fair trade means. Ultimately the standards are subjective and somewhat arbitrary. How do you determine a fair wage in a poor nation with few other employment options? How many hours are too many hours? What qualifies as safe enough? Does “underage” mean 18, 17 or 16
A particular challenge for electronics is determining what parts of the industry’s long supply chain falls under those standards. Depending on how you count, there are hundreds or thousands of components in the average smart phone, using materials sourced from around the globe.
Should we hold companies responsible for minerals that might have changed hands five times before arriving at a smelting facility? Can we realistically audit the origins of all those materials?
The answer may simply be no.
“Everyone would like to see a phone that comes from places where everyone is treated fairly, but in practice, I think the supply chain is so global and so complex that it’s virtually impossible to confirm 100 percent,” said Rick Pierson, an analyst at IHS Global Insight.
Take the tantalum capacitor, a component of circuits that holds an electric charge. There are more than 450 in an iPhone, according to IHS.
Some estimates say 20 percent of the world’s tantalum comes from the Congo, where its sale has financed militias that have committed atrocities over the last 15 years, including mass murder, rape and mutilation, according to various reports. These rebels have forced miners to dig up minerals for a pittance in conditions that make Chinese factories look like Google’s corporate campus.
Major volumes of other minerals critical for electronics – like tin, tungsten and gold – are produced under similar conditions throughout Central Africa.
In 2010, Steve Jobs addressed the complexity of tracking these materials in an e-mail to a customer.
“We require all of our suppliers to certify in writing that they use conflict few (sic) materials,” he wrote. “But honestly there is no way for them to be sure. Until someone invents a way to chemically trace minerals from the source mine, it’s a very difficult problem.”
And there are other complexities.
Human-rights groups like the Enough Project have pushed companies to stop using conflict materials in their products, ultimately helping to insert a provision into the Dodd-Frank financial reform law that mandates companies disclose when they buy conflict materials.
The Securities and Exchange Commission has yet to implement the rules, but the fact they’re coming has already led to big changes in the region – for better and worse.
A 2011 opinion piece in the New York Times called the law a catastrophe, saying smelting factories have responded by refusing to buy minerals from eastern Congo, even from legitimate suppliers.
“I heard from scores of artisanal miners and small-scale producers who used to make a few dollars a day digging ore,” freelance writer David Aronson said. “Paltry as it may seem, this income was a lifeline.”
But Aaron Hall, associate director of research at Enough Project, said that companies are figuring it out. He said that Motorola and Kemet, which makes capacitors, have set up systems that allow them to monitor and track materials. Meanwhile, the Electronic Industry Citizenship Coalition, whose members include IBM, Dell and Apple, launched a Conflict Free Smelter Assessment Program to identify facilities that aren’t using conflict minerals.
There are two points worth emphasizing here: One is that the industry is making some real changes, at least in certain parts of the supply chain.
The other is that fair trade doesn’t always come down to a simple moral choice. There are sometimes steep trade-offs and difficult questions. What’s the greater good: providing work to the desperately poor in the Congo, or preventing money from falling into the hands of warlords?
The final uncertainty surrounding the feasibility of fair-trade electronics is the most important one: Would enough consumers buy them?
On this question, there was a perfect split in my interviews between business experts, who said no, and advocacy groups, who said yes.
“The template is there and the world is waiting,” said Jeffrey Ballinger, executive director of labor group Press for Change.
But tablets and smart phones are volume businesses, meaning companies have to sell huge quantities of each short-lived version to make the numbers pencil out. A fair-trade stamp alone may not line up the buyers Ballinger speaks of, whose identities are often as wrapped up in their tech savviness as their political consciousness. To have any chance of success, the products would have to be technically comparable – without being far more expensive.
Big change in cost
In its recent exposé of working conditions at Chinese plants producing Apple products, the Times said various experts estimated building iPhones in the United States would add up to $65 to each device. But that doesn’t address the unsavory origins of the phones’ components – and doing so would surely raise costs higher still.
“Will people pay a social premium? Sure, some people would, but not enough to justify it,” said John Morgan, a business professor at UC Berkeley. “It still won’t make it economically viable.”
None of this is meant to argue that companies should get a free pass – or that we shouldn’t demand U.S. businesses use their clout to raise labor standards around the world.
It’s only to say that there aren’t any simple solutions to complex problems.
By: James Temple
The increased global interest in minor metals will shape the Commodities Review and Outlook ferroalloys and minor metals’ presentation at the 2012 Investing in African Mining Indaba, says commodity research and consultancy company Core Consultants.
Feature speaker, Core Consultants MD Lara Smith, tells Mining Weekly the company will particularly highlight minor metals cobalt and tantalum, as well as rare earths, as these metals are increasingly used in everyday technology and are experiencing an increase in demand.
“Cobalt, for instance, is used in lithium batteries and, with the manufacturing of electronic devices booming, we are seeing greater demand for cobalt as most electronic devices, such as mobile phones, tablets and laptops, rely on this type of battery for power,” she explains.
Further, she notes that 50% of global cobalt reserves are along the Copperbelt in the Democratic Republic of Congo (DRC) and Zambia, with only 5% of copper refined in the DRC and the rest refined in China.
However, Smith highlights that, although cobalt represents an opportunity for Central Africa through global demand, supply will be a challenge.
“Mining licences have been granted in the DRC but logistics are still a major concern,” she says.
Nevertheless, Smith predicts the price of cobalt will increase if supply is disrupted.
Meanwhile, tantalum, which is used in the production of capacitors for automotive and electronic equipment, is also experiencing increased demand.
“Supply of tantalum was traditionally supplemented by secondary sources, including DLA inventory sales and recycling. However, in 2007, the DLA ceased selling tantalum.
“Recycling has become increasingly costly as, in many instances, the recovery costs outweigh the extraction of tantalum owing to the miniaturisation of electronic devices.”
Also experiencing high demand are rare earths, the bulk of which are concentrated and produced in China.
Smith says substantial funds have been raised by Japan and invested in the research and development of rare earths recycling methods, as more countries attempt to diversify away from reliance on Chinese rare- earth material.
She notes that the introduction of new rare earths producers in other countries will be costly, compared with China, where the orebodies are more favourable and amenable to extraction and capital, and labour and environment costs are lower.
Smith will also provide Core Consultants’ price projections for these metals to attendees of this year’s Mining Indaba.
By: Reggie Sikhakhane
Faith leaders and business groups are colliding over a coming SEC ruling on little-known provisions of Dodd-Frank which require companies to track the use of “conflict minerals” in their production of certain consumer products.
One section of Dodd-Frank requires businesses to track – but not halt – the use of so-called conflict minerals from the Democratic Republic of the Congo, including a private sector audit of tracking methods. Another requires those involved in the commercial development of oil, natural gas, or minerals to disclose payments made to governments.
“It’s terrible what we’ve allowed to go on over the last few years without the world paying more attention to it,” said Rep. Jim McDermott (D-Wash.), on a conference call Wednesday with faith leaders. “As many as 7 million people have been killed… this is a mechanism by which we could cut off the flow of money to the rebels [in the Democratic Republic of the Congo]. The rebels are controlling the mines, and selling minerals on the black market.”
The SEC will soon make a decision on how to interpret the law, and certain business groups are suggesting that the sections would needlessly increase compliance costs.
“We’re concerned that industry pressure on the SEC will be so intense that they’ll water down the law and it’ll become ineffective,”said Corinna Gilfillan, the head of Global Witness, a human rights group.
Conflict minerals are found in all sorts of consumer products, and are widely used in electronics. The four main minerals mined in the Congo are tin, tantalum, tungsten and gold. Tin is used in circuit boards, tantalum in electronic capacitors, tungsten to allow mobile phones to vibrate, and gold as a coating for wires.
Heavyweights like the Chamber of Commerce, the American Petroleum Institute and the National Association of Manufacturers have expressed concerns about the provisions.
On the other end, religious figures have stepped up to join human rights groups in urging for a full enactment of the conflict mineral provisions.
“There is broad consensus in the religious community that transparency of minerals coming from conflict regions is a vital responsibility… we’re all concerned with trying to get conflict minerals out of the system,” said Rabbi David Saperstein, director of the Religious Action Center of Reform Judaism, on the conference call.
The faith leaders emphasized that their religions called them to treat other human beings with respect, which compelled them to support the Dodd-Frank provisions.
“What would it mean for us to be a neighbor to everybody in the supply chain used to make the clothes we wear, the computers we type on, and the cars that we drive? Our call to love is not defined by geographical proximity,” said Lisa Sharon Harper, director of mobilizing for the Christian group Sojourners. “We are all responsible for being good neighbors. It doesn’t matter if we have a good excuse… the people in the Congo are made in the image of God.”
“In the Jewish tradition, according to the Talmud, it was absolutely clear that there has to be transparency in the way that businesses went about selling their products. There were explicit prohibitions against deception, against watering down wine, against claiming something was something that it was not,” added Saperstein, also an appointee to the White House Council on Faith-Based and Neighborhood Partnerships.
By: Tim Mak
The Democratic Republic of the Congo: a region marked by violent conflict since 1996 in which torture, mass rape, forced displacement, and mass murder have been going on for years without much relief. It is a region in which armed groups are able to propagate the violence through the sale of the Congo’s mineral resources.
According to the Enough Project’s Raise Hope for Congo Campaign,
“Armed groups earn hundreds of millions of dollars per year by trading four main minerals: the ores that produce tin, tantalum, tungsten, and gold. This money enables the militias to purchase large numbers of weapons and continue their campaign of brutal violence against civilians, with some of the worst abuses occurring in mining areas.”
Most of these “conflict minerals” are used in the production of electronic devices in a process involving supply chains marked by a disturbing lack of transparency, so that by the time products such as cell phones or laptops end up in the hands of consumers, there is no way to know whether the purchase of those products contributed to the income of armed groups in the Congo.
The goals of many concerned activists are to find a way to ensure transparency in companies’ supply chains and to pressure companies found to be using conflict minerals to discontinue purchasing those minerals. The market for conflict minerals then, ideally, would be limited in terms of profit, reducing resources available to the armed groups, and thus pushing the armed groups toward peaceful resolution of the conflict which could open the region to other reforms.
There have been arguments that the initial attempts toward conflict-free policies have actually been detrimental to the Congo, by driving companies to search for minerals elsewhere, therefore crippling the economy and reducing the income of the general population. However, the UN Group of Experts recently issued a report stating that a conflict-free resolution proves to be an “important catalyst for traceability and certification initiatives and due diligence implementation in the minerals sector regionally and internationally,” and serves to reduce “the level of conflict financing provided by these minerals” in regions that have begun to comply to the due diligence guidelines. So, it seems that passing and implementing conflict-free resolutions are the first steps toward true reform and peace in the Congo.
Why not focus the fight for conflict-free reform on college campuses, which house a “particularly coveted demographic of electronics companies,” namely, students?
The Enough Project’s Raise Hope for Congo Campaign and STAND, a Student Anti-Genocide Coalition, have created the Conflict-Free Campus Initiative, a “nation-wide campaign to build the consumer voice for conflict-free electronics, such as cell phones, laptops, and other devices that will not finance war in eastern Congo.” By focusing on college campuses, the initiative “draws on the power of student leadership and activism to encourage university officials and stakeholders, both of whom are large purchasers of electronics and powerful spokespersons, to commit to measures that pressure electronics companies to take responsibility for the minerals in their supply chains.”
Organizing the student voice at the university level not only expresses the collective desire of individuals to ensure that they and their university do not participate in the perpetuation of the conflict in the Congo, but it also sends a powerful message to both political and corporate entities that consumers care about policies of those entities that may support the conflict. The Conflict-Free Campus Initiative explains:
“Universities are also a large client for most electronics companies and represent a large section of the buyers’ market for consumer electronics. By raising our collective voice as consumers, we can actually bring about a shift in corporate and government policy and help bring peace to Congo.”
Eight universities have issued conflict-free resolutions, including Stanford University, the University of Pennsylvania, and Duke University; more than sixty other colleges and universities throughout the United States and Canada have begun campaigns to do the same (including Yale University, Harvard University, Dartmouth College, Brown University, UC Davis, UCLA, UCSB, UCSC, Notre Dame, and Georgetown University).
The activism geared toward passing these conflict-free initiatives on college campuses has been successful in inspiring activity at the government level. California passed a bill prohibiting “state agencies from signing contracts with companies that fail to comply with federal regulations aimed at deterring business with armed groups in eastern Congo,” the first state bill to be passed regarding conflict minerals. Massachusetts is now also considering a conflict-free bill. Two cities, Pittsburgh, PA and St. Petersburg, FL, have also passed conflict-free resolutions.
If enough colleges, universities, towns, cities and states take the initiative in decisively acting to prevent the perpetuation of the conflict in the Congo by taking steps toward becoming conflict-free, perhaps the income of the armed groups committing mass rape and murder will be decreased sufficiently to prompt the beginnings of an end to the conflict.
Once the fighting ends, addressing the root causes of the conflict – including ethnic tensions – can be addressed through effective institutional reforms. But the fighting has to end before that can happen, and the fighting cannot end unless the actors in the conflict cannot afford to fight.
By: Cara Palmer
Dec. 7 (Bloomberg) — Global manufacturers may face a critical shortage of 14 raw materials over the next five years affecting industries including chemicals, aviation and renewable energy, according to PricewaterhouseCoopers LLP.
Seven manufacturing industries may be seriously affected by a critical shortage of raw materials “which could disrupt entire supply chains and economies,” PwC said in a report today based on a survey of senior executives from 69 manufacturers.
“Many businesses now recognize that we are living beyond the planet’s means,” Malcolm Preston, PwC’s global sustainability leader, said in the report. “New business models will be fundamental to the ability to respond appropriately to the risks and opportunities posed by the scarcity of minerals and metals.”
Beryllium, used as a lightweight component in military equipment, cobalt, used in industrial manufacturing and lithium, used in wind turbines and hybrid cars, were among minerals identified in the report as facing critical shortages. Tantalum and flurospar will also face a shortfall, it said.
By: Jesse Riseborough
In the jungles and mountains of the Democratic Republic of the Congo, battles are raging, part of a 13-year-long civil war. Most of the world has paid little attention to the murder and rape that still dominates life in the DRC’s eastern provinces. But U.S. electronics companies like HP, Intel, and Apple recently became deeply interested, thanks to a provision on “conflict minerals” that was slipped into a 2010 financial reform law, the Dodd-Frank Act.
The minerals provision is intended to deprive the Congo’s warlords of funds by cutting off sales from the mines they control. It focuses on the ores that produce the “three Ts”: tin, tantalum, and tungsten, as well as gold. Public companies that use these metals in their products will be required to investigate their supply chains, determine if they use metals that were mined in the DRC, and disclose their findings to the U.S. Securities and Exchange Commission (SEC), in their annual reports, and on their websites. If its minerals did originate in the DRC, a company must submit a larger report on whether the purchase of these minerals financed or benefited armed groups in that part of Africa. The SEC is expected to issue final rules for implementing the law before the end of the year, and companies are scrambling to get ready.
While the conflict minerals law applies only to companies that are required to file annual reports in the United States, it’s expected to have an international impact. Since mineral suppliers sell to electronics companies around the world, any change in operations they make for the U.S. market will have ripple effects elsewhere.
The law doesn’t only affect the electronics industry. But the conflict mineral issue has been linked in the public mind to electronics because the three Ts play crucial roles in smartphones, TVs, and laptops. Tin is used in solder and thus found on every circuit board, tantalum is used in capacitors, and tungsten is used in the vibrating motors of many phones.
Electronics companies had been warned that they’d eventually have to account for their use of these minerals. So firms like HP and Intel asked the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative, two trade groups, to investigate the industry’s options.
The groups found that it’s extremely difficult to determine the origin of the tantalum used in a certain batch of smartphones. But they also realized that only about 45 smelters worldwide deal with the three Ts, buying the ores from suppliers and turning them into pure metals. After several years of research, the industry groups came up with the Conflict-Free Smelter Program, which is currently in the pilot phase for its first metal, tantalum.
The program asks each smelter to allow an annual independent audit of its mineral procurement process. If the auditors are convinced that no minerals are sourced from the Congo’s conflict mines, that smelter is certified as “conflict free,” allowing companies to buy its metals without worry. While the program is voluntary, EICC spokeswoman Wendy Dittmer says many smelting firms believe it’s in their interest to participate.
“Electronics companies are starting to ask questions all the way down their supply chains,” she says. “That certainly makes the buyers of the minerals very interested in being able to talk about their own due diligence.”
There are concerns that the law may backfire. By making the reporting requirements more onerous for companies that source minerals from the DRC, the law may reduce demand from all DRC mines, even those that aren’t in conflict regions and don’t finance armed groups.
These concerns about such a de facto ban led Motorola Solutions to initiate the Solutions for Hope Project, in which Motorola and several other companies formed a relationship with a conflict-free tantalum mine in the DRC’s Katanga province.
To establish the program, Michael Loch, Motorola’s director of supply-chain corporate responsibility, visited the mine and accompanied a shipment of ore along its export route. “This pilot allows our industry to stay engaged in the area,” says Loch. “We didn’t want to abandon the region.” But he acknowledges that it took a lot of effort to get the process in place for one mine and says it may be difficult to scale up the program.
The pilot programs should provide a framework to make compliance easier. Still, companies around the world are waiting for the SEC’s final rules with some anxiety. And there may be some efforts to block the rules’ enforcement through U.S. courts. The U.S. Chamber of Commerce, for one, has discussed the possibility of a lawsuit. The chamber disagrees with the SEC’s initial compliance cost estimate of US $71 million, saying that costs will instead be counted in the billions of dollars.
One thing is already certain about the SEC rules: There will be no fines for using conflict minerals. Even so, activists think it will have its intended effect, because companies will want to avoid bad publicity.
“For years we have been unknowing consumers of these minerals because companies have turned a blind eye,” says Sasha Lezhnev, a policy consultant on conflict minerals with the human rights group Enough. “This will enable consumers to make choices on whether or not to buy products from companies that are sourcing from these mines.”
By: ELIZA STRICKLAND